Business

Sri Lanka’s thermal power plants ready to generate power from LNG within 18 months

Published

2 years ago

2024/08/22

Signatories from Petronet India and LTL Holdings Sri Lanka sign the MoU at Galadari Colombo on August 20.Pic by Saman Ranaweera

Move expected to bring down electricity cost by 40-50%

Government of India backs the B2B move to support people in Sri Lanka

By Sanath Nanayakkare

Sri Lanka’s thermal power plants will begin to generate power from Liquified Natural Gas (LNG) hopefully within 18 months, and this will help reduce current electricity tariffs by 40-50%, Power and Energy Minister Kanchana Wijesekara said in Colombo on 20th August 2024.

He said so at an event where Petronet LNG Limited (PLL), India, and LTL Holdings Limited, Sri Lanka, signed a Memorandum of Understanding (MoU) for LNG Infrastructure Development and LNG Supply to Sri Lanka.

The MoU is focused on providing an innovative solution encompassing supply of LNG through multimodal ISO Container supply chain. It involves the development of LNG unloading, storage, and regasification facilities at Kerawalapitiya, Colombo, and the supply of LNG from PLL’s Kochi LNG Terminal through LNG ISO tank containers for power generation facilities of Sobadhanavi Power Plant in Sri Lanka.

Speaking at the event, Minister Wijesekara said, “The government has come to a policy decision that generation and supply of power in Sri Lanka need to be on a sustainable footing without leaving any room for long power cuts like in 2022, which had an enormous adverse impact on the community and the businesses. At that time, we started discussing with various players and stakeholders of the industry. We had the first discussion in this regard with the Indian High Commission in Colombo during the term of Former Indian High commissioner Gopal Baglay. I appreciate the support extended to Sri Lanka by the government of India at the most difficult time by supporting our country through several credit facilities, critical fuel supplies and other forms of support. If not for that support from the government of India and Indian Prime Minister Sri Narendra Modi, Sri Lanka wouldn’t still have come out of its electricity crisis that led to a massive social upheaval.”

“At these discussions, we also focused on how we can bring down the cost of electricity while supplying uninterrupted power. One of the hard decisions we had to make was introducing the cost-reflective pricing as a first step. At that time, we faced the challenge of integrating new power sources to the national grid as the CEB and CPC had accumulated losses of Rs.300 billion, and we had little ability to pay the outstanding bills of our existing power suppliers. These two institutions had burdened the two state banks with borrowings amounting to more than Rs. 200 billion and the Treasury had also been burdened due to these financial constraints of the power sector. The media has published reports that with the cost reflective pricing, the CEB has posted a profit of Rs. 116 billion in the first half of this year. But the media failed to mention that the said accumulated losses were settled using these profits generated from the cost-reflective pricing mechanism. We used those funds to pay the outstanding bills of our suppliers such as LTL and other suppliers of coal and fuel who are key to eliminating power cuts in the country. In March 2023, the Secretary to the Ministry of Natural Gas and Petroleum Resources in India visited Sri Lanka with a high-level delegation. A key subtopic during these discussions was LNG supply and infrastructure required for the existing power plants in the country to generate power from LNG. The West Coast was also suitable for LNG, but it had no infrastructure for it. Sobadanavi and Ugadanavi plants were already there, and a third tender was being floated for power generation in Sri Lanka. In such a context, former Indian High Commissioner Gopal Baglay made a convincing case for Petronet LNG India to look at an interim solution for LNG supply for Sri Lanka. And Petronet came back within a month with an interim solution to make LNG available in nine months. But for this, we had to go through difficult legal frameworks and negotiations in creating the modalities for supply of LNG. After going through these hardships, today we have come to this historic day where we are going to finalize a permanent solution for the supply of LNG and infrastructure necessary for LNG power plants in Sri Lanka. With LNG coming to Sri Lanka, we can also look at other possibilities like LNG bunkering and even providing LNG pipe borne gas for cooking in households.”

Dr. Satyanjal Pandey, Deputy High Commissioner, High Commission of India (L) / Kanchana Wijesekara, Minister of Power and Energy (R)

“These are some of the vital avenues that will open with the signing of this MoU. There is an eighteen month timeline for this and we hope the infrastructure and the supply will be ready at least by the beginning of 2026. Then our power plants will be ready to generate power form LNG. This will significantly bring down the cost of electricity. At present, a unit generated from diesel power stations costs between Rs. 106 and Rs. 110. When our power stations operate from LNG , we can bring down this cost by at least 40-50% , and pass that benefit to the consumers. Overall, it will help bring down cost of energy in Sri Lanka. This is the first overseas venture for Petronet India. I know that you were pushed by the government of India to make sure that these facilities are available and your services are extended to the government of Sri Lanka. So, I thank the government of India and the management of Petronet LNG for working with us over the past 15 months to come up with proposals in order to make sure that you are supporting your neighbour and its people.”

” Sri Lanka’s LTL Holding played a key role in this exercise at a time the CEB was not in a position to come up with an agreement of this sort with a foreign partner. But LTL had that capacity to enter into a B2B agreement with the backing of the government of Sri Lanka. With this MoU coming in, the Ministry of Power and Energy will support you in facilitating your work, coordinating with the the ministries of ports and shipping, transport and highways, land and urban development , in securing the spaces in the Port of Colombo for logistical requirements and obtaining the lands required for the regasification unit in Kerawalapitiya. My ministry will work closely with the Indian and Sri Lankan companies to make this energy generation target a reality in the next 18 months,” the minister said.

Dr. Satyanjal Pandey, Deputy High Commissioner, High Commission of India in Sri Lanka speaking at the event said:

“The two governments are working closely to quickly achieve our shared aspirations. Today’s MoU is a testament to our continued efforts to build on this strong foundation provided by our bilateral relationship to collaborate in areas crucial to our future prosperity. The project of Petronet India and LTL Holdings reflect the mutual benefits and cooperation that define our relationship. The establishment of LNG facility in Kerawalapitiya by the two companies and the supply of LNG from Kochi Terminal will support Sri Lanka’s energy needs and also contribute to the energy security of Sri Lanka.”

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Business

Sri Lanka pitches Saudi investors for new investment partnerships

Published

23 hours ago

2026/09/29

Sahan Weerasooriya

Saudi and Sri Lankan dignitaries at the National Day reception.

By Ifham Nizam

Sri Lanka is pitching Saudi Arabia for greater investment and deeper trade ties, seeking to attract Saudi capital into new development opportunities while aligning bilateral economic cooperation with the Kingdom’s ambitious Vision 2030 agenda, Ports and Civil Aviation Minister Anura Karunathilaka, chief guest at Saudi Arabia’s 96th National Day celebrations in Colombo, said.

Addressing the National Day reception at ITC Ratnadipa, Karunathilaka said Sri Lanka was keen to identify new areas of economic cooperation with the Kingdom and create fresh opportunities for Saudi investors and businesses.

‘We look forward to creating new opportunities for the people of both countries by working in cooperation with Saudi Arabia’s Vision 2030 and its broader development initiatives, he said.

The minister said Sri Lanka wanted to move beyond its existing development cooperation with Saudi Arabia and build a broader economic partnership encompassing investment, trade and new development projects.

He noted that Saudi Arabia had already made a substantial contribution to Sri Lanka’s development. Since 1981, the Kingdom has provided concessional financing amounting to around Saudi Riyals 1.5 billion for 13 projects in Sri Lanka, supporting key sectors including energy, healthcare, education, drinking water and infrastructure.

Karunathilaka said Sri Lanka appreciated this support and was keen to build on the foundation created by those projects by opening further avenues for Saudi investment.

The minister’s investment pitch comes as Saudi Arabia advances its Vision 2030 programme, with the Kingdom seeking to diversify its economy and develop new international partnerships. Sri Lanka, meanwhile, is seeking to attract investment and expand economic opportunities through closer engagement with international partners.

Karunathilaka also highlighted the strong people-to-people links between the two countries, noting that nearly 250,000 Sri Lankans currently work and reside in Saudi Arabia.

‘They serve as an important bridge between our two countries and contribute significantly to strengthening the people-to-people ties between Sri Lanka and Saudi Arabia, he said.

He expressed appreciation for Saudi Arabia’s continued assistance to Sri Lanka and thanked the Saudi government for the facilities extended to Sri Lankan Muslims undertaking Hajj and Umrah pilgrimages.

Karunathilaka said Sri Lanka looked forward to working more closely with Saudi Arabia to strengthen political relations, broaden investment opportunities and enhance development cooperation.

Yaser Abdulrahman Al-Hazme, Chargé d’Affaires of the Royal Embassy of Saudi Arabia to Sri Lanka, said the embassy remained committed to strengthening bilateral relations by promoting political, economic and cultural communication between the two countries.

‘The embassy of the Kingdom of Saudi Arabia in Colombo has been keen during the past period to strengthen bilateral relations between the two countries by playing its role in supporting political, economic, and cultural communication, Al-Hazme said.

Al-Hazme also highlighted the embassy’s role in strengthening communication between Saudi and Sri Lankan institutions and following up on the interests of Saudi citizens in Sri Lanka.

‘On this precious national occasion, I extend my sincere thanks and appreciation to the government and people of the Democratic Socialist Republic of Sri Lanka for the attention and care given to relations between our two countries, and for the constructive cooperation that has contributed to strengthening the bonds of friendship and partnership between the Kingdom and Sri Lanka, he said.

Business

Sonali Rodrigo earns national recognition from Australia’s finance industry

Published

23 hours ago

2026/09/29

Sahan Weerasooriya

Sonali Rodrigo receiving the prestigious AFG Women on the Move Scholarship at the awarding ceremony held in Melbourne.

Australian finance professional Sonali Rodrigo has been recognised with the prestigious AFG Women on the Move Scholarship, presented by Australian Finance Group (AFG), in recognition of her leadership, industry contribution and impact spanning more than two decades in Australia’s finance industry.

The AFG Women on the Move program is dedicated to supporting and advancing women in the finance and mortgage broking industry, recognising individuals who demonstrate leadership, professional contribution, growth, impact and a commitment to empowering other women. The scholarship is supported by leading industry partners, including HSBC and Thinktank.

Sonali’s career spans more than 20 years in Australia’s finance industry, encompassing senior leadership, financial advisory and governance roles. Alongside her professional responsibilities, she has actively mentored and supported women in their career development, contributed to financial literacy, and helped individuals make more informed financial decisions. Her recognition reflects both her professional achievements and the broader impact of her leadership, particularly in creating opportunities and empowering the next generation of women in finance.

Business

Beyond the crisis: Sectoral paths to durable growth

Published

23 hours ago

2026/09/29

Sahan Weerasooriya

Institute of Policy Studies of Sri Lanka (IPS)

Continued From last Friday

Regional infrastructure improvements beyond the Western Province are essential to close market-access gaps and improve efficiency. The Western Province alone generates 42% of Sri Lanka’s GDP, but the dynamics of such agglomeration may also be highly underestimated. Officially, barely a fifth is deemed ‘urban’ in the province, but IPS re-estimates from the 2024 census using population density and infrastructure access, place the true figure at nearly 61%. The absence of strong secondary cities and industrial clusters outside the province reduces the potential gains from this agglomeration, thereby weakening incentives for firms to locate elsewhere or decentralise operations.

Fiscal incentives can promote decentralised corporate operations by offering tax rebates, lower property taxes, and land access in secondary cities like Kalutara and Gampaha, leveraging the connectivity of Southern and Colombo-Katunayake Expressways. The Hambantota seaport and airport, along with Koggala and Mirijjawela Export Processing Zones, can help develop the Southern Province through geography-based tax concessions.

Immediate measures, such as pricing vehicle entry into Colombo city will support regional agglomeration while tackling the acute problem of city congestion. Adopting a low-cost, technology-anchored free-flow method, similar to the Automated Number Plate Recognition (ANPR) currently used in commercial parking facilities for vehicles entering the city, is one such means. Installing high-mounted overhead ANPR gantries at key arterial entry points can operationalise congestion pricing without disrupting traffic speed. Fee collection can use a system like E-Tags electronic toll collection on expressways, integrated with digital payment gateways like GovPay and LankaQR for dynamic, time-of-day variable pricing.

The renewable energy transition is vital to drive competitiveness, external shock resilience, and green growth. Sri Lanka’s transition to renewable energy (RE) has advanced from a mere aspiration to tangible progress. Yet, the evidence suggests the transition is advancing faster on the generation side than the system built to absorb it. Transmission capacity, market design, financing channels, and digital infrastructure have not kept pace with capacity additions, and this gap is what will determine the pace of the transition through 2030.

Capital spending on transmission must be ring-fenced by legally, operationally, and financially separating the electricity grid (the transmission network) from the rest of the energy sector or by the broader government budget as a protected public investment within the medium-term budget framework. Funding should shift from general budget support to dedicated multilateral facilities, reinforced by sovereign guarantees for eligible borrowing. To safeguard public funds, this must be paired with a clear tariff pass-through mechanism that effectively limits open-ended Treasury exposure.

To build market trust, domestic budget funding should be earmarked for market-design technical assistance, signalling strong policy ownership rather than relying on external donors. Transparency too should be strengthened by publishing a firm implementation timeline in the Budget statement and fully disclosing long-term fiscal commitments from Power Purchase Agreements, capacity arrangements, and ancillary services.

(Concluded)